No major impact due to duty hike on prime tinplate: Steel Ministry.

NEW DELHI: Domestic metal container makers are not significantly impacted by the hike in import duty on prime tinplate to 7.5 per cent in the last budget, Steel Ministry has said.

"We are of the view that there does not appear to be any significant impact of increase in import duty on tinplate from five per cent to 7.5 per cent on the local metal container industry," Steel Secretary D R S Chaudhary has recently wrote to his Food Processing Industries' counterpart Rakesh Kacker.

The manufacturers of metal containers, which find use in packaging, an industry under the jurisdiction of the Ministry of Food Processing Industries, imports tinplates to cater to the Rs 4,000 crore domestic metal containers market.

India consumes around five lakh tonnes tinplates a year. Almost half of that is imported which comprises 35-40 per cent of seconds and defectives.

The government did not change duty on seconds imports in the last Budget, but increased the basic customs rate on prime tinplates from five per cent to 7.5 per cent.

"We have also looked into the total impact of increased customs duty..only about 49,200 tonnes of prime tinplates were imported during the period and the total impact of the increase...works out to about Rs 7.98 crore," Chaudhary said.

Steel Authority of India, Tinplate Company of India, GPT Steel Industries and Vallabh Steel are major tinplate makers in the country with a total installed capacity of 7.8 lakh tonnes per annum.

"The lower capacity utilisation is mainly because of substantial import of low-price tinplate, particularly the seconds & defective and waste-waste tinplates. In fact, Indian tinplate manufacturers have been requesting for upward revision of custom duty on prime tinplate," he added.

Meanwhile, in a pre-Budget memorandum, Metal Container Manufacturers' Association has said the industry has not been able to make major investments for modernisation as the funds are blocked in cenvat and increase in customs duty from five to 7.5 per cent, affecting their competitiveness adversely.

"We, therefore, suggest reduction in the import duty from 7.5 per cent now to 5 per cent," President of the Association Sanjay Bhatia said.

Source : economictimes.indiatimes.com